Resale Home Median Price Declines in Orange County

The median price of a resale house in Orange County fell 3.5% in October to $226,792, toppling the county from its perch as the state’s most expensive housing market.

But it is not yet clear whether the 1-month decline, reported Monday by the California Assn. of Realtors, signals the end of this year’s frenzied housing market or whether it is part of a normal fall slowdown in home sales.

“I think it’s a little bit of both,” said Thomas W. Queen Jr. of Grubb & Ellis Co.’s Newport Beach office, summing up the feelings of other brokers.

“But my crystal ball’s a little cloudy on whether the frenzy will start up again in January.”

Houses that were once snapped up by buyers shortly after hitting the listings now take longer to sell, said Queen and other real estate brokers.

That is quite different from the first 8 months of the year, when too many buyers chased too few houses, pushing prices through the roof.

While prices stagnated through much of the fall of 1987 and dropped 3.5% in January of this year, they took off and never looked back after that.

Even with the decline from September’s median of $234,934, the typical single-family detached house in Orange County still cost 31.5% more in October than it did a year earlier, when it was $172,499.

In fact, some consultants expect the high prices for both resale and new homes will put a house beyond the reach of many buyers, helping to cool the market well into next year.

“The market reached a plateau in demand around July,” said Ken Agid of the Marketing Department, an Irvine housing consultant. “Selling a house within 3 days of it going on the Multiple Listings is no longer a fact of the market.”

Few observers suggest that prices will actually drop over the course of the next year or that sales will fall dramatically. Many experts are merely expecting the return of a more normal market, with price increases of no more than 1% a month and perhaps less next year.

“It’s really unlikely there’d be a decrease,” Agid said. “But I think we’ll see appreciation slow down to a 10% to 12% a year basis.”

Meanwhile, the number of homes sold dropped a steep 15.4% from September to October. But much of that may be a normal seasonal dip because sales fell by a similar amount--13.6%--at this time last year.

How is Orange County doing compared to the rest of the state?

Home prices have been jumping each month across the state, though not nearly as much as in Orange County. The statewide median was $175,295 in October, up 0.7% from September and 21.9% from a year earlier.

The number of homes sold statewide was down 6.2% from September, but far less than Orange County’s drop of 15.4%.

The October price decline dethrones Orange County as the state’s most expensive market, a distinction it had held since February.

The Ventura County region led the list as the most expensive in the state in October, with a median price of $230,312. Prices in Ventura have jumped 43% over the past 12 months, according to the realtors association.

San Francisco placed second, with an October median price of $229,223.

Orange County was listed as the nation’s most expensive housing market for the second and third quarters of 1988 in surveys by the National Assn. of Realtors. The next national ranking will not be completed until early 1989.

“The market is exhibiting the usual seasonal pattern of slowing price appreciation rates in many regions and a general increase” in the number of homes for sale, said Joel Singer, the state trade association’s chief economist.

“The overall picture suggests continued strength in the California marketplace.”

CHANGE IN CALIFORNIA HOME PRICES

Comparison of median prices by region in California for October, 1988, and October, 1987.

Region October ’88 October ’87 % Change Orange County $226,792 $172,499 +31.5 Ventura $230,312 $161,028 +43.0 Los Angeles $191,474 $156,079 +22.7 San Francisco $229,223 $176,295 +30.0 San Diego $155,275 $132,972 +16.8 Sacramento $94,500 $87,556 +7.9 Riverside/ San Bernardino $113,220 $97,328 +16.3 Monterey $200,833 $166,315 +20.8 Central Valley $86,890 $82,816 +4.9 Palm Springs/ Lower Desert $92,857 $92,000 +0.9

Source: California Assn. of Realtors